Middle-income question: Were you better off in the 1990s?

Middle-income families with kids did far better in the 1990s than in the 2000s. So what policies should we pursue in the 2010s?

By
Jared Bernstein, Guest blogger /
October 6, 2011

US Census Bureau

(Read caption)
It’s hard to take seriously those who claim that 'supply-side' tax cuts, as in the Bush years, will help the middle class, compared with the more progressive tax regime of the Clinton years.

As I mentioned earlier, I’ve been collecting stuff on kids and their economic well-being. Here are a couple of figures that provide an intersection of a number of points I’ve tried to stress a lot in recent weeks.

It’s just a simple plot of real median income for families with kids, 1989-2010, followed by two bars showing the trough to peak of income growth in the two recovery periods.

The difference between how middle-income families fared in these two periods is really quite remarkable. I mean, when it comes to income growth, there are always lots of moving parts, but at first blush, if you’re a middle-income family with kids, you might want to keep these pictures in your mind when listening to the economic agendas of those who would be President.

That is, it’s hard to take seriously those who claim that “supply-side” tax cuts, as in the Bush years—large breaks tilted toward the top that are supposed to trickle down to the middle—will deliver for the middle class, compared to the more progressive tax regime of the Clinton years. It’s even harder to imagine how “shuttering the EPA” will make the difference.

There were important, real differences between these periods: the job market was much tighter in the former decade, job growth was about four times as fast on an annualized basis—importantly, the 1990s recovery lasted longer than that of the 2000s, in part because the only way for many families to get ahead amidst the flat income growth of the latter period was through cheap, easy credit. (In other words, there’s a linkage here between flat middle class incomes, the debt bubble, and the big crash.)

But so far, the road map I’m hearing from the R’s sounds like that of the 2000s, and that shouldn’t inspire anyone in the middle class on down.